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PM Narendra Modi announces labour reforms to boost ease of business

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Prime Minister Narendra Modi on Thursday unveiled a slew of measures aimed to change labour laws for the better and to make inspections more transparent and devoid of unnecessary harassment.

The measures include a taking away of inspectors' discretionary powers, easy portability for provident fund users, a worry-free labour law compliance web portal and a scheme for training apprentices.

Modi announced these measures at a ‘Deendayal Upadhyay Shrameva Jayate’programme here, with the government also sending around 20 million SMS text messages apprising organisations, labourers and youth about these schemes. Deendayal Upadhyay was a key founding figure and organiser of the Bharatiya Jana Sangh, ancestor party to Modi's Bharatiya Janata Party, now the country's ruling one.

Modi asserted these steps would lead to greater ease of doing business. “For the success of ‘Make in India’ (his recently announced programme to promote manufacturing), ease of doing business should be given priority,” said the PM.

Chambers of business welcomed it, saying these had been long-pending demands of the sector. “We welcome the 'Shram Suvidha Portal' to facilitate a single window for compliance with labour laws. Simplification of procedures has been a long-standing concern for industry…(this) will bring in a lot of transparency and accountability,” said Chandrajit Banerjee, director-general at the Confederation of Indian Industry.

He said with greater ease of doing business and availability of skilled personnel, growth of the manufacturing sector will get a big fillip.

The Union government also announced that work was in progress on reforms in the area of child labour (in the news following the Nobel award to Kailash Satyarthi for work in this area) and the micro, small and medium enterprises sector. "The labour ministry is working on these. The details will be revealed in the coming days," minister Narendra Singh Tomar said.

Modi on labour, governance

Modi said white-collar jobs were seen as dignified "but people often look down upon the working class…The labour class provides solutions to many problems surrounding our lives”.

Terming the new inspection scheme a part of e-governance, he said it would save industries from needless harassment. “Through technology intervention in the new inspection system, it will be easy, effective and economic governance which will lead to transparency,” he said.

He said a computer will decide where the inspector has to go for inspection and he will have to file his report within 72 hours, helping both labour and industry. The area of inspection will be divided into three parts: mandatory (extreme situation), optional (system-generated) and compliance-based. The inspector will get an auto-generated list.

The government also made operational the Universal Account Number (UAN) facility for EPFO subscribers, for ease and quick portability of PF funds on switching jobs anywhere in the country. It was possible, noted Modi, to easily switch mobile numbers while shifting to a different state but a poor labour is unable to mobilise his own PF while switching his job.

He underlined the fact that Rs 27,000 crore was currently with the Employees’ Provident Fund Organisation (EPFO) in inoperative accounts. “I want to return the money to those poor people,” said Modi. He termed the UAN a good initiative to link industries and banks.

Modi said these steps were directed towards his government’s motto of ‘minimum government and maximum governance.’

He also announced a unified labour portal for ease of compliance with four central government organisations – EPFO, Employees State Insurance Corporation, Directorate General of Mines Safety and chief labour commissioner. This will facilitate a common window for online registration of units, reporting of inspections, filing of annual returns and redressal of grievances.

Modi said a single-sheet compliance system had been introduced online for 16 labour laws.

He termed skill development a “big opportunity” for the country. “By 2020, we need millions of skilled people. Either he becomes a job creator or a job opportunity comes knocking on his doors.” He added people do not give due respect to students of Industrial Training Institutes.

Another scheme, ‘Apprentice Protsahan Yojana’, announced on Thursday, is aimed to increase apprenticeship coverage to 2.3 million from the 490,000 at present. The labour ministry will reimburse manufacturing units half the stipend paid to apprentices during the first two years of training. The scheme will support 100,000 apprentices up to March 2017.

The Centre also announced convergence of three schemes for the unorganised sector -- Rashtriya Swastha Bima Yojana, Aam Aadmi Bima Yojana and Indira Gandhi National Old Age Pension Scheme. Initially, the government will link all these schemes to a single 'smart card' and will have a \"single point of contact for service delivery\".

Launch of labour schemes:

1) New inspection scheme

Aimed to take away discretionary powers of inspectors

Inspectors have to file report within 72 hours

Inspection divided in three areas: mandatory, optional and compliance-based

Inspector to get auto-generated list about inspection location

At present 175,000 inspections by 8,000 inspectors take place in a year

2) Unified labour portal (named Shram Suvidha) for four Central government organisations – Employees Provident Fund Organisation (EPFO), Employees State Insurance Corporation (ESIC), Directorate General of Mines Safety (DGMS) and chief labour commissioner

Compliance sheet reduced from 80 pages to a single sheet

A common window for online registration of units, reporting of inspections, submission of annual returns and redressal of grievances

A unique labour identification number or LIN will be allotted to each employer after registration.

3) Universal Account Number (UAN) facility for 2 million EPFO subscribers for portability of PF funds on switching jobs

4) Apprentice Protsahan Yojana

Union labour ministry to contribute 50% of stipend cost to train youths during first two years of training programme

282,000 apprentices undergoing training under on-going government scheme; aim to raise this to 23 million

PM Narendra Modi announces labour reforms to boost ease of business | Business Standard News


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Modi's labour reform not quite enough | Business Standard Opinion | Business Standard Editorials
Speaking at an event organised by the Union labour ministry, Prime Minister Narendra Modi made some very important points about the direction in which his government should take policy. The prime minister said that the ease of doing business was an essential indicator of whether his "Make in India" campaign would succeed in reviving Indian manufacturing. He also promised an end to the "inspectorraj" that has long bedevilled Indian manufacturing. Labour inspectors are among the fleets of bureaucrats who wield considerable power over Indian entrepreneurs. On Thursday, Mr Modi revealed that there would henceforth be greater transparency in their decision-making - destinations for inspections would be decided randomly through an automated algorithm, and inspectors would have to file their reports within 72 hours, reducing the chances of harassment.

This is a welcome reform. But it simply does not go far enough. Mr Modi is right that Indian business suffers under an inspector raj. But introducing technological quick fixes is not a substitute for changing the restrictive laws that continue to empower the inspectors. As long as the laws that are the source of harassment are still on the books, it will be possible for intelligent people to out-think the various technological solutions being suggested. Nor is a computerised process in any way the real big-bang labour reforms that economists urge India to undertake. What is needed is to ensure that factor markets, especially for labour, are more flexible. Factoryowners must be convinced that India's laws no longer make an additional employee more of a burden in terms of paperwork or of future responsibility than they are a source of productivity increase. When that happens, then labour employment in the formal sector will increase in the way the prime minister has been promising. "Make in India" requires deeper structural reforms.

Unfortunately, what was on offer at the Union labour ministry's event on Thursday was a disappointment - many of the ideas announced there were rehashed and rebranded old schemes. Mr Modi's speech indicated that he understood the problems. It is a pity that his government has, however, not yet moved to address them. Certainly, some of the changes will help, if carried out as promised - reducing the complexity of the compliance paperwork that companies have to maintain, for example. But it is important to note that many states already have online compliance. The number of forms is merely a symptom, and attacking a symptom is usually futile. The disease is the laws themselves, which add unnecessarily to the costs of business in India. Some states, such as Rajasthan, Haryana and Madhya Pradesh, have indicated their willingness to do away with the more onerous laws. This requires the Centre's consent - consent that has still not been granted to Rajasthan's legislative amendments, in a puzzling delay. The prime minister, in his speech, seemed to indicate that he grasped the importance of labour law. He has certainly convinced most observers that his focus is the revival of labour-intensive manufacturing in India. But repackaging old laws or technological tweaks is not the way to go about it.
 
Modi's labour reform not quite enough | Business Standard Opinion | Business Standard Editorials
Speaking at an event organised by the Union labour ministry, Prime Minister Narendra Modi made some very important points about the direction in which his government should take policy. The prime minister said that the ease of doing business was an essential indicator of whether his "Make in India" campaign would succeed in reviving Indian manufacturing. He also promised an end to the "inspectorraj" that has long bedevilled Indian manufacturing. Labour inspectors are among the fleets of bureaucrats who wield considerable power over Indian entrepreneurs. On Thursday, Mr Modi revealed that there would henceforth be greater transparency in their decision-making - destinations for inspections would be decided randomly through an automated algorithm, and inspectors would have to file their reports within 72 hours, reducing the chances of harassment.

This is a welcome reform. But it simply does not go far enough. Mr Modi is right that Indian business suffers under an inspector raj. But introducing technological quick fixes is not a substitute for changing the restrictive laws that continue to empower the inspectors. As long as the laws that are the source of harassment are still on the books, it will be possible for intelligent people to out-think the various technological solutions being suggested. Nor is a computerised process in any way the real big-bang labour reforms that economists urge India to undertake. What is needed is to ensure that factor markets, especially for labour, are more flexible. Factoryowners must be convinced that India's laws no longer make an additional employee more of a burden in terms of paperwork or of future responsibility than they are a source of productivity increase. When that happens, then labour employment in the formal sector will increase in the way the prime minister has been promising. "Make in India" requires deeper structural reforms.

Unfortunately, what was on offer at the Union labour ministry's event on Thursday was a disappointment - many of the ideas announced there were rehashed and rebranded old schemes. Mr Modi's speech indicated that he understood the problems. It is a pity that his government has, however, not yet moved to address them. Certainly, some of the changes will help, if carried out as promised - reducing the complexity of the compliance paperwork that companies have to maintain, for example. But it is important to note that many states already have online compliance. The number of forms is merely a symptom, and attacking a symptom is usually futile. The disease is the laws themselves, which add unnecessarily to the costs of business in India. Some states, such as Rajasthan, Haryana and Madhya Pradesh, have indicated their willingness to do away with the more onerous laws. This requires the Centre's consent - consent that has still not been granted to Rajasthan's legislative amendments, in a puzzling delay. The prime minister, in his speech, seemed to indicate that he grasped the importance of labour law. He has certainly convinced most observers that his focus is the revival of labour-intensive manufacturing in India. But repackaging old laws or technological tweaks is not the way to go about it.


He isn't going to change the system overnight , its going to be a slow change over next couple of years .
 
Just presenting a counter-view. It would be boring if everyone agreed.

Sure, and am just pointing out its not going to be done over night as some people expected things to change in first 1 week of his PMship.
 
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